EWC by country of headquarters & choice of applicable law

Similarly as in the case of sectors, we observe a high variation in numbers of EWCs depending on the country where the company in which they are set up has its headquarters. Looking at the headquarters of the companies having an EWC, we see that the vast majority of EWCs are active in companies having their headquarters in the ‘old’ member states. Germany is in the leader position, followed by France and the UK. What is more, EWCs are also frequently active in non-European multinationals having their headquarters in the US, Switzerland, Japan or Canada. (De Spiegelaere and Jagodzinski (2015) EWC Facts and Figures).

It seems that national traditions and corporate culture (country of origin/headquarters of an MNC) do have an impact on the establishment of EWCs. The national distribution of EWCs by country of headquarters of the parent company shows significant variations between the EU member states.

As can be seen in this figure, the highest number of currently active EWCs is found in German companies, followed by US-based multinational enterprises operating in Europe, and British, French and Swedish companies.

Choice of applicable law

EU directives are not directly applicable in EU member states. They have to be transposed and implemented through national legislation (see Jagodzinski (2015) Variations on a theme? Implementation of the EWC Recast directive). Every country therefore decides autonomously how to implement the EU regulations on European Works Councils. At the same time, the EWC regulation covers multinationals active in at least two member states, giving rise to the question of which rules these EWCs have to follow.

In the majority of cases (67% of all EWCs), EWCs are established according to the rules of the headquarter country. Yet this is not always so. First of all, if the headquarters of a company is established in a non-EEA country, the agreement establishing an EWC has to choose a national legislation whose rules it will follow. Secondly, even if companies are headquartered in a European country, the negotiating parties are still entitled to agree to establish their EWC according to the national rules of another European country.

Non-EEA headquartered companies

In about 23% of cases, the country of headquarters is a non-EU country. These EWCs have to make a decision on the national law that will be applicable, and most choose the UK, Danish, Belgian or French EWC implementation laws. Less popular choices have been the Irish, Dutch and Italian implementation laws; only rarely have other implementation laws been chosen.

European MNC choosing another applicable law

Companies headquartered in one of the EEA states can also, given an agreement, choose to establish their EWC according to a national law other than that of their headquarter country. 6% of EWCs with their headquarters in Europe do not choose the law of their headquarter country as the applicable law; instead they generally choose for their EWC the Irish or French implementation laws.